How has trade affected and transformed China since 1978?

1. How has trade affected and transformed China since 1978?

2. Historical Background • Chinese Economic Reform 1978: Deng Xiaoping introduces capitalistic market principles after long economic decline under Mao. “It doesn’t matter if the cat is black or white as long as it catches mice” “It is glorious to grow rich”

3. Two Main Stages • First stage : late 1970s- late 1980s: decollectivisation, opening to FDI • Second stage : late 1980-late 1990s: massive privatisation, the lift of protectionist policies (SEZ etc).The economic reforms have continued to evolve yet still seem to follow these main ‘principals’ today. • ASTOUNDING RESULTS But also.. • INEQUALITY

4. Since 1978: estimated GDP growth of 9.5 % Since 1978, China’s economy has doubled in size every eight years.

6. A high increase in FDI • Foreign Direct Investment in China went from 1.3 billion in 1984 to 92 billion in 2008 = multiplied by 70 in 25 years. • Second destination for FDI after the USA

7. As well as in the private sector.. • The domesticprivatesector first exceeded 50% of GDP in 2005 and has furtherexpandedsince. • China’sprivatefirmsaccount for about 75-80% of profit in Chineseindustry and 90% in non-financial services.

8. 21st Century : Global Insertion • China joined the World Trade Organisation in 2003 and agreed to abide by Free trade rules with the Association of South East Asian Nations. This has greatly promoted her trade and industrialisation. • China is a very important power on the world stage.

9. China becomes the 2nd world economy

10. “Let the flowers bloom” • 2004: China signs a landmarktrade agreement with 10 SoutheastAsian countries, whichcouldeventuallyunite 25% of the world’s population in a free-tradezone • 2008 : Hosts Olympics • 2010 : Shanghai Stock Exchange (onlyreopenend in 1980) is the 5th largest stock market in the world • 2011 :China is the U.S.A.’slargestcreditor, holding more than $900 billion worth of U.S. Treasury bonds • China is the world’snumber one exporter • The services sector employs 33% of the workforce, but she is still a world leader in textile, toys and auto part manufacturing (presence of the tertiary and even quaternary sector)

11. Positive social Changes Between 1981 and 2005, an estimated 600 million Chinese people moved out of poverty/China’s poverty rate dropped from 85% to 15%. According to China’s official statistics, between 1978 to 2007: • China’s per capita rural net income increased from 133RMB to 4,140RMB. • China’s per capita urban disposable income increased from 343RMB to 13,785RMB.

12. The Chinese “save”

13. The flip side to the “reform and opening up of 1978”

14. Trade hasn’t had only beneficial effects • China is a good example of the Myrdal Model: a strong core and a limited periphery (here the core is the coast (access to ports etc) • Widening of the Urban/Rural gap • China ranks 53rd worstworldwide in terms of incomeinequality • Sustainability?

15. Rural => Urban migration 85% of China’s poor live in rural areas.

16. Population Density

19. Inequality is widespread

21. Other issues • Though the social inequalities appear to be the most pressing other issues may become problematic in the next couple years. • Environmental sustainability (soil erosion, pollution (75% of China’s energy now comes from coal), water shortages.. • Corruption in the Communist government

22. Conclusion • Trade has been an important part of China’s success and one can consider that it has transformed this country. • However, the affects of this “opening-up” aren’t always positive and it is important to keep in mind long term issues such as sustainability.